Renewable power target in doubt?

Last updated on 11/05/2016

Is the Executive’s target of generating 40% of our electricity from renewable sources by 2020 at risk?

I ask the question because DETI is currently looking at the costs and benefits of reaching that goal. Now, just because the Department is examining the issue doesn’t of course imply a change of course. At present the target remains what it has been for the past four years.

Currently we are half way there. Around 20% of power now is produced from renewable sources. That is largely through wind turbines though other forms of generation make a contribution.

About 600 MW of renewable generation is currently installed. It is estimated that we would need a further 1000 MW in place to be able to hit the 40% target by 2020. We don’t pay directly for the building of the turbines or PV solar farms. Nor will we pay directly for the strengthening of the grid to accommodate this equipment but the cost will eventually be met through electricity bills.

It is just difficult to find out exactly how much extra charges will have to rise because of the dash for renewable power. In 2010 DETI in its Strategic Energy Framework offered this assessment.

“Working with consultants, DETI has estimated that the combined cost of renewable electricity installations, together with the cost of the grid investment necessary to meet the 40% target, could be between £49 and £83 per household on an annual basis at current prices.”

A body which represents renewables here, the Northern Ireland Renewables Industry Group (NIRIG) has produced a a more recent estimate which is much lower. While it says the cost of new investment in the grid would be £360 million, the addition to household electricity bills would only be £7 a year. Even allowing for the fact that NIRIG is presumably talking about investment from now to 2020 while the earlier estimate was from the start of the process in 2010, the disparity is rather large.

No doubt DETI will produce a new estimate of its own. If the cost turns out to be high, might the Executive be tempted to stop short of the 40% target?

Here’s a few thoughts. The target is not a statutory one. It can be amended without the same implications had it been enshrined in legislation. Across the water the target for renewable electricity is much lower at 30% in 2020 and bills there are smaller than here. And that’s highly relevant. While voters like the ideas of green energy they are not enthusiastic about paying extra for it. A survey by the Consumer Council in 2012 showed that renewable electricity was only a top priority for seven per cent of consumers, well behind price and reliability of supply.

And lastly and most critically DETI is apparently not committed to the full 40% target if it proves too costly. Here’s what John Mills, the head of energy at DETI, told the Enterprise Committee at Stormont last June: “….what I envisage coming out of it (the cost benefit review) is that 40% will cost you a certain amount. Let us hope that, if you got to 38% for £100 million, and it costs an extra £300 million to get to 40%, it would be common sense to go for 38%.”

While I wouldn’t want to read too much into that one comment, it certainly gives a flavour of DETI thinking. It might be moderately embarrassing to abandon the 40% target but if achieving it is expensive it will prove popular with homes and businesses.

We should know more by the end of the year when DETI publishes its cost benefit review.